Rural broadband in India could become a reality

Broadband connectivity (or should we say ‘availability’) has been reasonably good in Indian metros over the last 5 years. I do hear often from friends who are unable to get broadband connection from telcos like Airtel because of ‘non availability of ports’ in their locality. I do hope wireless broadband (BWA) does become a reality this year in India, that will ensure the availability of broadband for every home.

The government of India has been taking a lot of interest in getting broadband connectivity in rural India. Many may just write off Tier-2 and Tier-3 towns of India but most successful ecommerce portals would confirm that over 30-40% of their orders are from Tier-2 towns.

There were nine million broadband subscribers at the end of April 2010, of which a mere five per cent were in rural areas. The Government had set a target of 20 million broadband subscribers by 2010 as part of the Broadband Policy 2004. #fail

The government project, envisaged under the National Broadband Plan (NBP), aims to roll out 500,000 route km of optic fibre cable across the country to boost broadband uptake. Connecting entire rural India will cost over Rs 20,000 crore (approx $4.44 billion).

Department of Telecom (DoT) is primarily responsible for the implementation. So who pays for it? DoT wants to “tap” the funds from Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) for bearing the cost of labour for laying optic fibre cable broadband network. The Ministry of Rural Development has rejected this plan of DoT but ‘morally’ back the broadband project.

DoT will now seek Telecom Commission’s approval to finance the entire project from the Universal Services Obligation (USO) fund.

The scheme will be implemented through creation of a national optical fibre network (NOFN).

The optic fibre cable network is expected to cost around Rs 18,000 crore over a three-year period.

The USO fund currently (2011) has about Rs 20,000 crore in its kitty. Around Rs 6,000 crore is added every year. USO fund is expected to grow up to Rs 30,000 crore in three years’ time (2014).

The recommendation has been made by the Telecom Commission and the proposal is to be sent to the cabinet for approval.

The implementation of the ambitious scheme will be overseen by a high level committee headed jointly by Sam Pitroda, the architect of India’s initial telecom revolution and Nandan Nilekani, chairman of the Unqiue Identity Development Authority of India.

Rural (or let us say non-metro) broadband connectivity can be of great interest to the entire internet eco system in India. Recently at Business Conclave at GoaFest 2010 it was said,

Ending the session, Arun Tadanki, CEO, Yahoo! India talked about Digital – the missing link in Advertiser’s armoury. He said, “There are many incorrect perceptions about this (digital) medium. It’s seen as a niche medium, but the figures say that the Internet user population in India is thrice that of people who read English newspapers and the spend on the latter is almost Rs 6700 cr. Another perception is that Internet is for the SEC A urban youth, but numbers say that two-third of internet users in India are beyond the metros and does not primarily include those from SEC A.”

Rural market is far bigger in size when compared to the market in metros. This will give the much required steroids for the domestic computer hardware sector & ISPs. We can’t expect much boost for the software market because of ‘piracy’.